Scammers aren’t slowing down, and neither should you. Here are five financial and insurance scams to brush up on, the better for you to spot them when one inevitably comes your way.
Another day, another scam ring busted. In the face of potentially large payouts, is it any wonder that scam syndicates aren’t showing signs of slowing down, despite the valiant efforts of police forces around the world?
Because wolves are constantly on the prowl, ordinary folks like you and I have little choice but to keep our guard up at all times, and to err on the side of caution.
Knowing is half the battle, so here are five financial and insurance scams that you should familiarise yourself with in order to avoid falling victim.
Churning insurance scam
No, this isn’t a butter-related scam, although the practice is just as greasy.
Churning refers to the act of getting clients to switch insurance policies under the guise of benefiting from newer features, promotional rates, or other insignificant reasons.
The real motive is even more petty. Insurance agents engage in churning as a way to pump up their sales numbers and earn more commission. They may also do this when they switch from one agency to another, and want to move their clients to their new agency.
Churning is an unwelcome practice, because it does not place the interest of the client first, as all certified financial advisors are sworn to do. Thus, it is a serious offence, and any agent caught doing this will be dealt with by the law.
How to avoid
If your insurance agent starts disparaging a plan or policy they previously recommended to you, you should be wary they are attempting a churn. This is especially true if they are strongly promoting a policy from an insurer different from the one that issued your existing plan.
Question them thoroughly on the actual differences between the two policies, and how what they are proposing is superior. You might also want to seek the opinion of a qualified third party.
If the agent struggles to come up with any concrete answers, and instead tries to tempt you with vouchers, discounts or prizes that have nothing to do with your coverage, you’ll know their intentions aren’t exactly the purest.
Motor workshop insurance scam
In a motor workshop insurance scam, victims of traffic accidents suddenly find themselves beset by people claiming to be ‘insurance claims specialists’, who offer to take over the tedious task of submitting your motor insurance claims for you.
What’s the catch? You’ll need to send your damaged vehicle to a motor workshop they specify, which will replace your parts with cheaper off-brand substitutes, and do all sorts of shady things.
But here’s why they really want your business. The workshop inflates the cost of your repairs, so as to claim a much higher sum against your insurance policy. A portion of this ill-gotten gain is given to those ‘claim specialists’ as commissions, while the workshop pockets the rest.
Be aware that giving in to these parasites implicates you in the fraud, and you could lose your policy coverage.
How to avoid
Say no to any strangers who try to offer their services when you meet with an accident. If they refuse to back down, call the police.
Fake or dishonest renovation contractors
Many Singaporeans regard their homes as assets worth investing in, and are willing to spend good money turning it from drab to fab. Renovation contractors know this, and unfortunately, there are some bad actors who will try to scam you of your hard-earned money.
Despite tough crackdowns, fake and dishonest contractors still rear their ugly head every once a while.
Some will pose as authorised agents, and target the elderly with repairs they don’t need, threatening action if they don’t pay up. Others will lie that they are licensed to carry out renovation work, when that is not the case.
Still others will promise you the moon and the sun, but fail to deliver even a basic level of work. I once personally encountered a contractor who tried to inflate my bill by insisting on repainting the ceiling, when my ceiling is spotless, with nary a blemish to be seen. Of course, he didn’t get the job.
How to avoid
Unfortunately, the standard of professionalism in the sector can still be a little lacking. Check with your circle for recommendations on contractors they had good experiences with, instead of working with an unfamiliar party,
You should also research as much as you can, and ask around on Facebook groups or other platforms about the contractors you are thinking of engaging. For large scale projects, you should always insist on signing a proper contract, with work scope and payment terms clearly spelled out. And never pay up in full until the work is done to your satisfaction.
Another way to protect yourself is to engage a reputable interior design firm who will manage the entire project on your behalf – you’ll likely need to pay more this way, but you’ll at least have an experienced professional to help you manage things.
It starts like this. Victims click on a job advertisement promising instant work with quick earnings. After signing up, they are told that the task is to help boost the online presence of an e-store, by making purchases.
Victims are directed to pay for the purchases using their own funds at first. They are then refunded for the purchase, and given a small commission.
Believing that this is a legit job, victims feel compelled to continue making purchases to earn commissions. They are encouraged to make larger and larger purchases, until they reach a certain threshold, at which point the scammer disappears.
By then, the victim would have spent a substantial amount of money, and would have no way to get their money back.
How to avoid
No decent job will ever ask you to pay money in order to work. If getting paid requires you to give them money in one way or another, you should walk away and call the police.
Delivery Failure Scams
In this scam, crooks attempt to steal your personal information by sending you a message informing you of a failed delivery. The message is spoofed such that it appears to have come from Singpost or another legitimate organisation.
You’ll be given a link which will send you to a website, where you can supposedly make arrangements for a re-delivery of your package. You will also be asked for sensitive information, such as bank details and credit card information in order to secure your parcel.
However, the website, like the message, is fake, and the information you enter will be used to make unauthorised transactions on your bank account without your knowledge.
By the time you discover the theft, it will be too late. Worse, you will have to bear the burden of proving that you did not authorise or make those transactions.
How to avoid
Always check with official sources to verify the authenticity of the message.
Never click on unfamiliar links, and always type in website addresses by hand.
Before entering important or sensitive information, always carefully check the URL displayed for any typos, errors or anything that looks out of place.
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By Alevin Chan
An ex-Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimise happiness and enjoyment in his life.